California Sees Modern-Day Gold Rush

The 1849 Gold Rush on California drew unprecedented numbers of prospectors to the American West. Now, 160 years later, as the recession bites across the state, there is still gold in them thar hills -- and new treasure hunters have joined the chase. With the precious metal trading at almost $1,000 an ounce, it's a gamble that, for the lucky ones, could really pan out.

From Downieville in the north to Modesto and the Mojave desert outside Los Angeles, the state is seeing prospectors in growing numbers. Pat Keene, who runs a mining equipment store in the Chatsworth area of L.A., says his customer base doubled this year. "I know a lot of people who have lost their jobs who are out prospecting for gold," he says.

VIDEO: Modern-Day Gold RushPlay

Unlike the gold prospectors of the 19th century, today's diggers have the benefit of sophisticated metal detectors that can help them zero in on nuggets hidden in the clay. But apart from that, the methods have changed little in a century and a half. In river beds they use sieves and on dry land they use small shovels and pickaxes – which makes for thirsty work under the California sun. Many prospectors join clubs that go out together for a weekend, digging for gold by day and sitting around campfires swapping stories by night.

Keene is a third-generation prospector, and says he has gold in his blood. But it is the rising price of gold that attracts many of the newcomers. Five years ago an ounce of gold cost $420. Today that same ounce costs $923, as people see gold as a safer investment than many of the financial instruments that have crashed over recent months.

We met one rookie, Ian Oeder, from Paso Robles, who had come out for the first time and found a small gold nugget just five minutes after starting. He was almost speechless. "It is so cool – I don't know what to do… I am not selling it, that's for sure," he said, proudly showing a little fleck of gold that is worth at most $20. But the excitement of finding gold goes beyond the financial payback.

"It is kind of like being a modern-day pirate," says Keene. "You're looking for treasure, and when you find it, there's nothing quite like it."